Family finances, parenting, and raising money-smart kids.

How to Teach Kids About Money – Ideas for Every Age

Teaching our kids about money and finances is arguably one of the most important things we do as parents. And yet, most kids are not learning financial literacy in school. It’s up to us to give our kids a solid financial education to help them succeed as adults.

When can you start teaching kids about money?

Many children as young as two or three can grasp basic financial concepts such as saving and spending. In fact, a report by researchers at the University of Cambridge found that kids’ money habits are formed by age seven.

The good news is teaching kids about money can be simple – especially while they are still young. As I wrote about recently, raising money-smart kids starts with modeling, talking about money, involving kids in decisions, and giving them responsibility.

Of course, a two-year-old will not understand your lengthy lessons in compound interest and credit cards. But, a 17-year-old will! Just remember to keep it simple, fun, age-appropriate, and interactive.

Here are a few ideas for teaching kids about money at every age.

Note – Use these age brackets loosely! Kids develop at different rates, and have such different money personalities. Adjust your conversations to your unique learner and don’t be afraid to challenge them in a positive way. Kids have amazing ideas!

Preschool (Ages 2-4)

Most preschoolers can understand the basics of spending and saving and they are starting to learn numbers, counting, and basic math.

I like the idea of using simple every day activities to foster these skills, and remember – the more visual and concrete you make it, the better.

Talk about how we buy things with money

Identify items that cost money

Play store or restaurant

Count and trace coins

Play matching games with bills and coins

Talk about how we work for money

Ask, do you need this? Or, do you want this?

Start to teach delayed gratification. (Ex: Don’t buy everything they ask for – explain we need to save for it, or wait for a birthday or Christmas)

Elementary (Ages 5-10)

Elementary school kids have more developed math and logical thinking skills. As such, they can grasp more financial concepts.

This is also the age our oldest boys has started asking for more stuff, so there are many learning opportunities to educate on delayed gratification, saving, and the value of a dollar.

Middle School (Ages 11-13)

Most middle school age kids can start thinking abstractly. They are ready to apply their knowledge. Empower them with responsibility!

This is also a great time for them to start working for extra money and to use technology to increase their learning.

Talk about budgeting and only spending what you have. Give them control over a budget, such as a family activity

Introduce the idea of credit (Ex: it is not free money)

Allow them to take out a loan from you and charge interest

Challenge them to come up with a business idea

Set a savings goal, track progress

Encourage them to ask questions about money and finances

As appropriate, involve them in family financial decisions and explain your decision

Discuss privacy and security

Talk about peer pressure with money and material items

Have them research items online before buying

Continue to set and track financial goals, start talking about future financial needs such as college

Continue playing board games and card games that make math, strategy, and money fun

Expose them to how other cultures live (for a sense of gratitude)

High School (Ages 14-18)

Most high school age kids understand cause and effect and are starting to think about future goals and paths.

Teenagers have improved reasoning skills and are better at understanding abstract ideas, which means now is the time to crank up the financial literacy.

Teach them how to create and manage a budget (use Apps like You Need a Budget, Personal Capital, or Mint)

Teach them how to write checks and balance a checkbook (will checks still exist in five years!?)

Require them to work to earn extra spending money

Show them your pay stubs. Discuss how much you make vs. take home pay

Talk about taxes

Allow them to try and fail with business or money-making ideas

Explain how a credit card works, and how interest adds to the cost of purchase (again, it’s not free money)

Help them navigate peer pressure with spending and material items. Be sympathetic and patient – this isn’t easy

Use technology (YouTube, apps, websites, etc.) to teach them more advanced financial topics

Provide a debit card, pre-paid credit card, or checking account

Research college costs and options together. Discuss if you will pay for any part of college, and their responsibility in paying for a portion (if applicable)

Talk openly about your financial decisions, successes, and mistakes

Young Adult/College (Ages 18-22)

By the time our kids finish high school, our goal is they will be financially literate. Help your teenagers and young adults understand financial basics so they can avoid expensive mistakes, evaluate future plans, and start saving and investing early.

Great list! My 6 year old has just discovered Monopoly, and is quite the real estate mogul in training.
We also have a very simple interest system for her allowance. If she spends nothing for an entire week, she gets an extra quarter per day until she spends again. That’s high, but I wanted to make it simple and understandable. That system has allowed her to save up for a couple of big ($50+) toys that she really wanted.
We also talk a lot about how things compare to her allowance. So she knows that buying a box of Cheezits is about half an allowance, but paying for a week’s groceries is about 20 allowances.

Great tips! We already do the “trade-off” idea with my 3 year old. He has his own money from chores and gets to pick a treat at Target. He knows he can only pick one. You should see him picking up a treat, then putting it back when he finds a better one. It’s hilarious!